China’s steel output fell 3.6% in January–February as weak construction demand and a prolonged property downturn forced mills to curb production despite broader signs of economic resilience
China’s steel output declined in the first two months of 2026 as producers continued to scale back production amid weakening demand from the construction sector, underscoring structural challenges in the world’s largest steel market.
Data released Monday by the National Bureau of Statistics showed the country produced around 160 million tonnes of crude steel in January–February, down 3.6 per cent from the same period a year earlier.
The drop comes despite broader economic indicators suggesting a relatively steady start to the year. Official data showed
industrial output growth accelerated to 6.3 per cent in the first two months of 2026, while retail sales rebounded 2.8 per cent, signalling resilience in parts of China’s economy even as domestic demand remains uneven.
Seasonal slowdown and cautious mills
The opening months of the year are typically a quieter period for China’s steel industry due to the Lunar New Year holiday and temporary pollution controls imposed ahead of the country’s annual legislative meetings in Beijing.
However, analysts say the latest decline also reflects a more cautious stance among steelmakers.
Producers have been reluctant to build up inventories in anticipation of the usually stronger spring construction season because of uncertainty surrounding demand, according to Steven Yu, a researcher at consultancy Mysteel.
Property crisis and slower building activity
China’s steel industry is increasingly facing structural headwinds as the economy matures and construction activity slows.
Demand from the property sector, once the backbone of steel consumption, has weakened sharply amid a prolonged real estate downturn. The slump has reduced demand for construction materials ranging from steel rebar to structural beams.
With domestic consumption faltering, steel exports had emerged as an important outlet for surplus production. But that channel is also showing signs of strain after tighter licensing rules were introduced for overseas shipments.
Industry faces structural decline
The slowdown comes after China’s crude steel output fell below 1 billion tonnes in 2025 for the first time since 2019, reflecting ongoing efforts by authorities to rein in excess capacity and reduce pollution.
The government has repeatedly urged steelmakers to curb production and has introduced stricter rules on building new plants. However, policymakers have so far avoided imposing the deeper supply cuts many analysts say are necessary to fully rebalance the market.
Some industry observers have also raised questions over the accuracy of official production figures, given the complex reporting structure across China’s vast steel sector.
With inputs from agencies.
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